Friday, June 24, 2011
Commitment of Traders - Oil 6/24
Here is an updated chart from Barchart on the commitment of traders:
We took another step down from last week! Big money is leaving the trade...
Thursday, June 23, 2011
Dollar at Resistance
That 76.22 line has been support (green circle) and resistance (red circles) in the last 3 months or so. And yet again today, we are bumping against it. Until we go through decisively, we can't get too bullish.
That 200 dma is still going down as well...
That 200 dma is still going down as well...
Sunday, June 19, 2011
The Mysteries of Copper
Copper has been acting wildly over the next few months - victim to some financial shenanigans in China and an unclear picture of the real demand.
The technical picture is not brilliant! It is trading below the 200 dma (green line) and flirting with both the 15 and 50 dma (red and blue lines). Both are below the 200 dma which is an indication of weakness. I have drawn 2 more studies - a regression channel of 1 standard deviation with dating back to the lows of last June and some Fibonacci lines covering the same period. Copper has been hugging the bottom line of the regression channel (which is still pointing up) and trading between 2 Fibonacci lines at 3.91 and 4.19. The 200 dma is at 4.20 now so going through both lines will not be easy. But as with other commodities, the current political situation could change everything quickly.
As far as indicators are concerned, a lot of them are pointing up now as of last week! For what it's worth...
The technical picture is not brilliant! It is trading below the 200 dma (green line) and flirting with both the 15 and 50 dma (red and blue lines). Both are below the 200 dma which is an indication of weakness. I have drawn 2 more studies - a regression channel of 1 standard deviation with dating back to the lows of last June and some Fibonacci lines covering the same period. Copper has been hugging the bottom line of the regression channel (which is still pointing up) and trading between 2 Fibonacci lines at 3.91 and 4.19. The 200 dma is at 4.20 now so going through both lines will not be easy. But as with other commodities, the current political situation could change everything quickly.
As far as indicators are concerned, a lot of them are pointing up now as of last week! For what it's worth...
QQQ On the Brink
Talk about an ugly chart - look at the QQQ as of Friday!
All the signs point down - the index is below its 15 (small red line), 50 (blue line) and 200 dma (lime green line). In addition, both the 15 and 50 dma are now pointing down. I have a added a regression channel dating from the last lows of last July with width of 1 standard deviation and we broke below that for the first time last week! We closed below the lows for March. The next real support is around 52.68 where there is a fib line that was confirmed by some congestion back in November.
The problem with the QQQ is that there is no real leadership from the big guns - AAPL has been flat to down, CSCO is finding a bottom, INTC and MSFT are going nowhere. NFLX is not going to save the index!
On the lighter side, I have one double-smooth stochastic indicator pointing up as of Wednesday which could indicate a bottom (or temporary consolidation) which it has in the past. But it's sometimes too early and other indicators are pointing down! But geopolitic issues are weighing on the market now and it's not something that indicators will predict.
All the signs point down - the index is below its 15 (small red line), 50 (blue line) and 200 dma (lime green line). In addition, both the 15 and 50 dma are now pointing down. I have a added a regression channel dating from the last lows of last July with width of 1 standard deviation and we broke below that for the first time last week! We closed below the lows for March. The next real support is around 52.68 where there is a fib line that was confirmed by some congestion back in November.
The problem with the QQQ is that there is no real leadership from the big guns - AAPL has been flat to down, CSCO is finding a bottom, INTC and MSFT are going nowhere. NFLX is not going to save the index!
On the lighter side, I have one double-smooth stochastic indicator pointing up as of Wednesday which could indicate a bottom (or temporary consolidation) which it has in the past. But it's sometimes too early and other indicators are pointing down! But geopolitic issues are weighing on the market now and it's not something that indicators will predict.
Friday, June 17, 2011
Oil - June 17
Not a pretty picture with oil at the end of today. Using the lows of February and Highs of last month as anchors for a Fibonnaci study, we can see that the 50% retracement line held for a while (large red circle), acting as support and resistance for close to a month with spikes to the 38% retracement line. But this week has been bad with both the 61.8% retracement line and the 200 DMA broken! The 50 DMA is no decidedly going down and above the 15 DMA.
All my others indicators are now pointing down. The next support line is at 90.50, but it's weak. Real support is around 85 which is where the big money came in during the last rally. But anything is possible on a daily basis especially over a weekend!
The daily lines worked pretty well today again:
The daily lines worked pretty well today again:
It got pretty dicey in the afternoon when S3 was broken (first green circle) but the market recovered around 92.50 (there is a dail fib line there not pictured) and climbed back to S2 (second green circle) by the end of trading. It is not encouraging for the oil market that on a day when the dollar lost over 50 basis points that oil lost ground as well.
Wednesday, June 15, 2011
Follow the Big Money on Oil
Looking for an explanation for the oil move in the latest weeks - look no further than the big money leaving the station. Barchart (www.barchart.com) publishes a Commitment of Trader chart updated on a weekly basis. The latest one is below.
The middle chart is the traditional Commitment of Trader (COT) chart. The green line is what is called Large Spec. These are large banks and money managers. The blue chart in the lower chart (Disaggregated COT) represent Managed Money (commodity traders or advisers). The charts plot the difference between long and short positions of the various groups. The higher the line, the "longer" one group is. Look what has been happening since early May - big money is getting out of oil. They have been driving the price up since last September and now, they are cashing in. And look at the price since then... Surprise!
The Value of Support and Resistance Lines
The move in oil today is the perfect illustration of why it is valuable to have an idea of where the price will "stick" in the coming hours. Drawing support and resistance line based on previous day prices is the easiest way. The formula for calculating the Pivot Point and the Support and Resistance line is available on the Internet. I have programmed Amibroker to display them automatically in my charts at the beginning of the day. Below is today's price action on the oil future market.
The Pivot Point for the day is in gray, the support lines in red. Resistance lines do not appear as they are above 100. The red circles point out congestion areas and support where you can tell that there was some hesitation on the direction. It is not always that clear cut, but these lines usually offer some guidance!
The Pivot Point for the day is in gray, the support lines in red. Resistance lines do not appear as they are above 100. The red circles point out congestion areas and support where you can tell that there was some hesitation on the direction. It is not always that clear cut, but these lines usually offer some guidance!
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